Federal Help for Underwater Mortgages

In real estate terms, an underwater home rarely means it’s actually under water. Today a lot of homeowners are finding themselves underwater with their mortgage, meaning that they owe more on their current home loan than the home is currently worth. This can be a critical situation for people who want to sell their homes or are having a hard time meeting their monthly mortgage payments. The government is stepping in to help with a few programs designed specifically for people with underwater mortgages.

Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program is for people who are still current on their mortgage but cannot refinance through traditional means because their home value has declined. A HARP refinance is designed to give you more refinancing options and hopefully keep you current on your mortgage so you don’t have to deal with a foreclosure situation.

Principal Reduction Alternative (PRA)

Principal Reduction Alternative programs help homeowners recover some of the losses on underwater homes by encouraging your mortgage servicer to reduce the amount you owe on the balance of your home, this should place it more in line with the current market.

Treasure/FHA Second Lien Program (FHA2LP)

This program is for people who have second mortgages and the mortgage servicer of your first loan agrees to participate in an FHA Short Refinance. Then the second mortgage servicer needs to agree to the FHA2LP. This is a tricky program with a lot of hoops to jump through but worth the effort for people in this situation.